The question is, where was your money while everyone else's was growing?

(BEGIN VIDEOTAPE)

VELSHI (voice-over): I've got a message for the 47 percent. You know who I'm talking about.

MITT ROMNEY (R), FORMER PRESIDENTIAL CANDIDATE: There are 47 percent of the people who will vote for the president no matter what.

VELSHI: No, not that 47 percent. I'm talking about the 47 percent of you who are invested in the stock market at an all-time record high for the Dow. Simple message, wake up.

While you have been hitting the snooze button, stocks have been soaring. This isn't a new thing. It's been going on for four years. Whether it's $100 or $10,000, you need to be invested. Putting that money in the bank or the pillow case is costing you as inflation erodes the value of your money.

I know what you're thinking, easy for you to say now that we're setting records. Pay attention. When the market was at its lowest, I was saying the same thing.

(On camera): For those people who did stay involved with the stock market, they have actually seen something of a gain.

(Voice-over): Today even with the stock market in record territory, more than half of you still say that investing in stocks is a bad idea.

I know you're afraid. I know you still don't trust banks and regulators and maybe even companies. But while you're sitting around mistrusting or being wary, everyone else is making money. Lots of it.

(END VIDEOTAPE)

VELSHI: Now the question for those who had the foresight to get into this market is now what? With the Dow ascending from its bottom of 6547 on March 9th, 2009 to its new record high of 14539 set on March 14th, the question is, stay in or cash out?

That is an important question and it is one I'll get to later in the show. But first I want to focus on the 47 percent of you who admit you do not invest in stocks. Not even through an IRA or 401(k) or some sort of pension plan. We're going to figure out why you don't and bust some myths out there so you can take advantage from this market even in the midst of a bull rally.

Let's start with the reasons that you aren't invested. You've got no money, you've got no trust in the system and you've got no guts to withstand the ups and downs and uncertainty of the market. You are just plain scared to get in.

Joining me now for more on this is Louis Barajas, a financial planning expert who heads up his own wealth management firm in Southern California, and Ryan Mack, the president of Optimum Capital Management and he is a financial planner with a -- and a vocal advocate for financial literacy in America.

Ryan, let's start with you. No money. That is what a lot of people say. They do not have the money to get into the stock market. You have said, you wrote a book where you talk about how little people can have to get started. Can you -- if you can put away 25 bucks a month -- get into the stock market?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Absolutely. You know we have two types of individuals. We have those types that say that they're struggling to live check to check. They are struggling for shelter. But then you have those individual who would prefer to believe that they're struggling, living check to check. But when it comes to that new phone, an iPhone, they're first in line. When it comes to paying $10, $15 a month for lunch, they're able to do that, to afford that.

That premium cable membership that they are watching television for, they can afford that. They don't prioritize these types of things but there's tons of things out there that are available for 25 bucks out of your paycheck. If you have purchase program, turn to purchasing stocks, you can buy Kellogg, you can buy Microsoft, you can buy GE, you can buy different types -- Disney. All of these types of Fortune 500 companies, you can purchase for as little as $25 a month.

VELSHI: Right.

MACK: Directly from their Websites.

VELSHI: Like Ryan, Louis, you deal with people who in many cases are making their first foray into financial literacy and a big problem that they are going to have is trust. A lot of people say the markets are rigged against individual investors, that small fries like them don't have a chance against the big boys. And I have to tell you, Louis, I don't disagree. I don't trust the financial system all that much myself, but I need it to create wealth and the stock market has made people rich over the last four years. LOUIS BARAJAS, PERSONAL FINANCE ADVISER: Well, absolutely, but the problem is that, you know, there's no trust because we don't even trust our politicians besides the financial institutions, besides the media. I mean, we're watching this show, we're going to turn the channel and watch another show and all of a sudden we don't know who to trust.

VELSHI: Right.

BARAJAS: And even with our own communities out there, we don't know who to trust in the financial planning industry. It's all based on -- most of the times it's commission now. They're selling us products that at the end of the day they're really high in cost, lots of fees and -- well, again, who do you trust?

VELSHI: But in the end, what do you tell people who you counsel? Because you've seen this market run. I get it. There's a real reason not to trust people. But what do you do? Do you sit it out?

BARAJAS: No, you don't sit it out. What I do is I focus on long term. I focus on creating hope in people, making see look, if you're going to be invested in the stock market or in equities like in real estate as well, you have to actually -- those are growth type of investments. Putting your money into the -- into savings account for long term for your retirement is very risky. It's riskier than an putting into an index fund over the term. So they have to trust themselves.

VELSHI: Right.

BARAJAS: They have to educate and inform themselves, you know.

VELSHI: Well, that's an interesting point, Ryan, because most people would think the opposite. They would say, putting my money into a bank is not risky. Putting it into a index fund, which is a basket of stocks, is risky. Comes down to people's fear. No guts. Worried about the market. The market is volatile, it's risky. What do you do when people tell you that?

MACK: Well, essentially, you know, it's this thing about fear and ignorance allowing us to dictate our financial decisions. And we should never allow fear or ignorance. There's nothing wrong with being ignorant, there's something wrong with staying ignorant. We should never be scared of something that you don't know about.

And essentially a lot of individuals are scared of something because they have not put money in the market. What I ask them is, what other alternatives do you have? You show me another alternative that can give you a 13.2 percent rate of return for the three-year average, which is what the Dow Jones gave us over the past three years. You show me another alternative that can give that type of return, that can give you that type of security.

And again what we have to do -- this is what Louis has been doing for years and what I've been doing for years is directly addressing and making sure that you know there are other alternatives such as exchange traded funds. For 150 bucks a share you can buy the entire S&P 500 through the SPY SPDR. You can buy --

VELSHI: Ticker -- all you need is a trading account to get in.

MACK: Exactly.

VELSHI: And this is -- just gives you exposure to the entire S&P 500.

MACK: Again, again, you don't trust -- again if you don't trust because it's high risk, there's ways to mitigate that risk.

VELSHI: Right.

MACK: By diversifying your portfolio.

VELSHI: And I want to -- I want to remind your viewers that you and you, Louis, you talk to people who in many cases start off without a great deal of financial literacy. So it's not --

BARAJAS: Absolutely.

VELSHI: You guys are not guys who are dealing with exclusively high net worth individuals who know the money markets and the financial markets inside out. Get down to specifics with me, Louis. How should a newbie get their feet wet? What should they do with their money if they want to -- if they've listened to you today and they want to do something?

BARAJAS: OK. The first thing they need to do is they need to get educated. Understand the difference between risk and volatility. They need to learn the rules of the game again. Ryan and I have written countless books on all this stuff and it -- what we're trying to tell people, learn the rules of the game and don't feel intimidated. Ask a lot of questions and if you're going to seek help, go to people who are not going to sell you a product. There are a lot of great fee only financial advisors throughout the country who are not going to sell you anything and give you great advice.

VELSHI: Fee meaning you pay them.

(CROSSTALK)

Obviously you have to pay them for their -- the value of their advice, but you pay them a fee like you would a lawyer or an accountant as opposed to necessarily commission?

BARAJAS: Right. And again be careful. Anybody you talk to is going to try to sell you something. But it's more of an intimidation factor at this point. What happens in our communities is we don't have money mentors. You know the reason I went -- went into and open up a mutual fund because I had a friend who had done it and goes, let me show you how. And so now what happens is the business model of financial planning.

VELSHI: Yes.

BARAJAS: It's really made it into a point that it's not sustainable for a lot of advisers to work with the poor, work with people who are just barely making it.

VELSHI: Sure.

BARAJAS: And so it's all about priorities and so I'll tell you what, look --

(CROSSTALK)

VELSHI: Ryan, you're big on this as well. Ryan, you're very big on mentoring people.

MACK: Right.

VELSHI: This is one of your biggest points in your book that if people need mentors, they need to say hey, I like the way you make money, let me in on that.

MACK: It's time for us to start looking for education from outside- of-the-box thinking. We don't necessarily have to go to a financial adviser, get educated, but you must get educated.

VELSHI: Right. If I'm putting in 25 bucks a week or I'm putting in a $150, how do I do so without getting scraped through with these fees that Louis keeps talking about? Are there ways to get in and not end up overpaying to be a small investor?

MACK: Again, we have to educate ourselves. I mean, again, the direct purchase programs, many of these companies are charging nothing, zero dollars for you to invest directly than those companies. Stock websites like ShareBuilder.com that invest about $4 per transaction fee. You've got BUYandHOLD.com which has a little bit more excessive fees but it's very important for you to educate yourself about how to go about purchasing these different types of things.

FOLIOfn.com is another different site. You want to make sure you can have that. Oneshare.com allows you to invest in one individual stock and get one share maybe -- as a different gift to --

VELSHI: That's like a gift to a kid or something to get them --

MACK: Yes. Exactly.

VELSHI: Encourage them.

MACK: You frame it, you put it up on your wall.

VELSHI: Yes. Yes.

MACK: It allows you -- gives you good motivational boost. Again, I'm not -- I'm advocating making sure that before you put your dollar in anything --

VELSHI: You learn.

MACK: Get fully educated yourself about it. VELSHI: Got it. Both of these guys have written great books that appeal to people who are otherwise, as Louis says, intimidated by the idea of getting into the stock market.

Louis Barajas is a personal financial advisor in Los Angeles and Ryan Mack is the president of Optimum Capital Management here in New York.

OK, 47 percent of you that don't invest, that's it. I'm off my sofas. No more complaining, no more berating you about not cashing in on this rally. Coming up next I'm talking to the rest of you, the 53 percent of you, who do invest in the stock markets. Stocks are still on a tear but how long will this run last? Longer, I think, than some of you may think.

(COMMERCIAL BREAK)

VELSHI: OK. We've talked about the 47 percent of Americans who haven't taken advantage of the stock market rally. But what about the rest of us? This month the Dow has been shattering records. Sure American companies are doing well and the economy is starting to look up, but there's no denying that this rally is in large part fuelled by the Fed, which has kept interest rates so low that you can't make money anywhere other than the housing or stock markets, and the stock markets are a lot more liquid than buying a house is.

To help prop up the down economy, the Fed has been pumping $85 billion into the financial system every month in exchange for bonds. And by doing that, the Fed increases the money supply. It drives down interest rates. For awhile now the Fed's funds rate, which is the benchmark rate for mortgages and other loans that Americans use to raise money has been at near zero.

Now the hope is that banks and other lenders will use this cash to lend to consumers and businesses. Borrowers will take advantage of the lower interest rates to purchase homes and cars or start new businesses and get the economy churning again.

It's been working. Home prices are rising again due in part to historically low mortgage rates. More Americans are finding jobs again. But the Fed says it won't stop printing money until the employment -- unemployment rate dips below 6.5 percent which means that the Fed is probably going to be at it until about 2015. Probably into the end of it.

Now the flipside to the Fed's action is that investors in bonds and interest bearing accounts have suffered. It's a low-interest environment, which makes stocks the only liquid investment game in town and that explains, at least in part, the bull market that we're in.

Joining me now to discuss this Michelle Girard. She the chief economist at RBS Securities and Ned Riley, the CEO of Riley Asset Management in Florida.

Ned, good to see you. I have laid out why the Fed has helped fuel this bull market rally. But when you buy a stock, you are buying a piece of a company at a share of its earnings. And the so-called price to earnings ratio or PE ratio used to figure out the value of a stock is still low.

Let's take a look here. I want to show our viewers. The S&P 500 is seeing average price to earnings ratios of 15. That's the bottom bar. That's half of where they were during the dot com bubble. Lower than where they were five years ago when the Dow and the S&P were trading at about where they are now. That makes me think this isn't just the Federal Reserve propping this market up.

What do you think?

NED RILEY, CEO, RILEY ASSET MANAGEMENT: No, it isn't. As a matter of fact, the fear that's in people's hearts right at the moment, it reminds me of Rodney Dangerfield. The market has -- really has no respect. Nobody has respect for this market that it is real. Clearly what we're seeing is the public and institutions, Ali, I might point out, have been lowering their equity exposure during this period of time. The public only has 30 percent in equities. As you pointed out 47 percent don't even invest in the stock market, which I think in my 40 years being in the business is the craziest thing I ever heard of.

The final thing that I'd like to make a point of right at the moment is that there's so much liquidity, people are going to be losing money in bonds as interest rates rise. People are going to be losing real return when they have money market funds because inflation is going to beat that low return that you've got out there. And there's over $1 trillion in my judgment to be put back into this equity market.

And I agree with your statement. That it's going to take more than a year or two. In my judgment, I think this is a long-term secular bull market. I said it two or three years ago.

VELSHI: Yes.

RILEY: And I'll say it again right at the moment. This is a long- term secular bull market that's supported by very low confidence at the moment and as a simple axiom goes, you buy when there's a lack of confidence. You sell when there's greed, euphoria, and giddiness prevailing.

VELSHI: All right, Michelle, assuming the market continues on this bull run, what happens next? Because at some point, unemployment starts to go down. It will happen. We've been creating jobs for, what, 36 months straight now. And the Fed is going to realize that they can't put $85 billion or $45 billion into the economy every month. That it's time to -- starts to pull back.

Explain how that ends up working.

MICHELLE GIRARD, MANAGING DIRECTOR, RBS: Well, a couple of things. I mean, you're absolutely right. The Fed is -- and you laid it out exactly what's happening and how the transmission mechanism is working. So the Fed is buying $85 billion a month and that is exactly putting pressure, it's bringing down interest rates and yields, and it's pushing people into the equity market. And the Fed has been very clear as the labor market improves their need to continue to buy at that pace is going to be reduced.

And so there's a lot of concern in the marketplace that as the year progresses, if the unemployment rate continues to fall, we may see the Fed's scaling back a bit.

Now a couple of points, I think, are important to remember is that, you know, the Fed, and I would agree with them, doesn't necessarily think it's that $85 billion a month in purchases that matters so much. It's just the fact they're keeping the balance sheet large. I mean, if they stop buying but all that money is still sloshing around in the system, then that is still going to be very supportive --

VELSHI: Right.

GIRARD: You know, for -- obviously for the financial markets and the economy. And the other thing to keep in mind is of course as we get the Fed in a situation where they're needing to provide less support, that's because the economy is doing better.

VELSHI: Right.

GIRARD: Presumably job growth will be better. The fundamental will be good.

(CROSSTALK)

VELSHI: Right. So as they pull out -- correct. As they pull out, Ned, because a lot of people say to me, oh the minute the Fed bails out of this thing, you know, get -- take all your money out of the stock markets and move somewhere else. But if the Fed pulls out, there -- that's a signal that the market is off life support. Right? It's like you're taking somebody off life support because they're breathing on their own.

RILEY: Yes. Finally all the medicine has worked, the operation is successful, and clearly we then shift to the private sector. You got to remember that the unemployment rate today at 7.7 or whatever percent is costing us a fortune. It's costing us over $100 billion for each percentage point of unemployment.

VELSHI: Right.

RILEY: The fact is as the economy grows, the Fed goes from that current rate of 7.7 to 6.5. Real growth in this country will start to accelerate. That's the whole point. Inflation may come back a little bit but we're still well below the long-term average of inflation. And T bills will come back and yields from the fractions of today to 3.3 or 3.5 percent.

VELSHI: Michelle, let me ask you this. At some point when normalcy returns, there will be people who can go back to putting their money into treasuries or bank accounts because interest rates will come up. But that's -- until then, the stock market and the housing market do remain largely the biggest games in town.

What does this low interest rate mean for industries? What industries benefit the most from this type of thing?

GIRARD: Well, we're seeing it really pretty much across the board. And this is one of the reasons why when people say well, it's just the Fed pushing the stock market higher, the fundamentals that are supporting the stock market are there. And, you know, the companies -- company balance sheets are so strong in large part because across the board we have seen companies able to refinance their debt, bring down their interest expense, deleverage.

I mean, all of this in this environment, you know, corporations have strengthened and remained probably the strongest sector of the U.S. economy. Profits as a percent of GDP are near record high levels. They were record high levels in '11. They haven't come off very much. I mean, these are the reasons why the Fed's -- you know, what the Fed's actions are working and again, I think it's -- I think you're selling the market short to some extent if you say it's solely because of the buying that the Fed is doing.

VELSHI: Both of you, great to talk to you as always.

Michelle Girard is the managing director of the Royal Bank of Scotland, the senior economist at Royal Bank of Scotland. Ned Riley is the CEO of Riley Asset Management.

Up next, one of the most important things to look for when investing your money in a company is transparency. One company showed the world this week exactly how transparent it is or at least how transparent its yoga pants are. I think the way Lululemon handled the mess shows some sheer genius.

(COMMERCIAL BREAK)

VELSHI: Even if you read CNN Money's top stories every day, which I recommend you do, you won't get our take on the news anywhere else.

Christine, let's first start with a budget, and I say that with air quotes because it will never become the law of the land. Yet elected officials in this country feel the need to spend lots of time on it.

This week House Republicans passed the latest version of Congressman Paul Ryan's budget. Now they did this in the same stupid way Washington does things these days. Budgets are not meant to be presented and put forward for a partisan vote like this one was. They're meant to be discussed and negotiated and compromised on. None of that has happened in this country since 2009.

CHRISTINE ROMANS, HOST, CNN'S YOUR BOTTOM LINE: I know. Let's break it down, Ali. Ryan's budget had no new taxes, it would drastically curb spending in part by repealing Obamacare and overhauling Medicare. And it would eliminate the deficit in 10 years. Total cuts, $4.6 trillion. And given that it has zero chance of passing in the Democratic-controlled Senate, it is dead on arrival. VELSHI: There was some good news in Washington this week. Kind of. Lawmakers in both the House and the Senate approved legislation to fund the government through the end of September. That avoids the risk of a partial federal shutdown.

In the process now, Christine, they are on spring break for a couple of weeks. What's your take on this?

ROMANS: My take on this is the whole financial dysfunction of our Congress is just mind blowing. You know you look at this week, for example. You look at this week -- let's say Frederick, Maryland, where there's this air traffic control tower that's going to be shut. Right? It likely will be shut. And their traffic control tower that actually was built and refurbished by the stimulus money.

So think of this. Stimulus money went into this tower. The government saying it's a priority for this for safety purposes. And then the government because of its dysfunction now saying --

VELSHI: Shut it down.

ROMANS: We have to shut is down. That is a perfect representation, I think, of how Washington is not doing its job. We can't even pass a budget. It can't even run the books. There's no strategy. That -- when you look at some of these core spending cuts, you see exactly a lack of a strategy in American finances.

VELSHI: Yes.

ROMANS: It's a real problem.

VELSHI: We've been complaining about this for months. Now when I say FedEx, you probably think of the guys in the white truck coming to deliver a package or document. What you should think about is FedEx as a gauge of the global economy. This week FedEx posted its third straight quarterly drop in earnings and it raised some red flags saying shipments to and from Asia slowed substantially.

Also customers are starting to ship their orders to slower methods of shipping in an effort to save money. This isn't a good sign. FedEx ships worldwide so analysts frequently look at its earnings report as an early indicator of where the global economy is headed.

ROMANS: The stock tanked this week. Dropping below $100 a share for the first time since January. We know Europe is still a mess. It slipped back into recession, but these fears center around slowing growth in Asia. So how worried should we be about what Asia and FedEx are telling us?

VELSHI: Wow. Wow. ROMANS: What FedEx says is happening in the world really matters.

VELSHI: Matters.

ROMANS: It's twice the size -- its revenue twice the size of Cyprus. You know, how a little thing like Cyprus can be a real problem? That's why we care about what FedEx says because they really do have their thumb on the pulse of the global economy.

VELSHI: Finally, Christine, when it comes to covering companies and their finances I think transparency is crucial. But when I say that I'm talking about their policies, their practices and their finances. Not their yoga pants.

Lululemon is a great Canadian company and unlike BlackBerry and Nortel it's never struggled for survival. Does quite well selling expensive yoga and related athletic wear. Excellent Canadian national anthem in the back.

ROMANS: Is that what I think it is?

VELSHI: Yes. But it had to pull several styles of pants from its stores, yoga pants, because they were too transparent. Too see- through. Too shear.

ROMANS: Well, what's not so hot, Ali, is the company stock price. It got hammered after all of this, of course. After the recall. It's been a tough year for Lulu, but don't shed any tears for its investors just yet. The stock is up 220 percent in the past three years. And its stores are packed with the kind of customer every loyal -- every retailer wants, loyal shoppers with money to spend.

OK, so the CEO was asked during a conference call with investors this week basically why the company didn't realize the fabric was see through, the response is priceless. Rarely in a conference call to investors do you get this kind of -- I don't know.

VELSHI: Truth.

ROMANS: Truth. The truth of the matter is, the only way that you can actually test for the issue is to put on the pants and bend over.

(LAUGHTER)

VELSHI: OK. On that note I think we'll close this up.

OK, up next, when should it make you happy to get a D plus? When the grade you got last time was a D. I've got the new report card for America's infrastructure. And if Uncle Sam had parents, they would ground him for a month and cut off his allowance.

(COMMERCIAL BREAK)

VELSHI: When is a D plus a good grade? When it's better than the grade you got four years ago. This isn't a term paper. These are America's roads, bridges, waterways and power lines. And this D plus? It's the first time in 12 years that America's infrastructure has earned a grade this high.

A new report out this week from the American Society of Civil Engineers measures 16 categories from aviation to roads and waste water. No category earned a lower grade than it did four years ago. Six categories saw improvements. Bridges, rail, roads, drinking water, solid waste and waste water. Solid waste earned the highest grade on the report, a B minus. Go, solid waste.

So what's driving the improvements? The federal stimulus gave infrastructure a short-term boost. Cities and states are renewing their efforts to fix roads, bridges, drinking water and waste water systems. And private companies are investing in railways, ports and in the energy grid. But the American Society of Civil Engineers says all that investment is not enough. But 2020 the U.S. infrastructure will need $3.6 trillion. That would get us to a B grade which is adequate for now.

But the American Society of Civil Engineers projects that the U.S. will spend just $2 trillion leaving a $1.6 trillion gap.

I want to bring in Michael Grunwald and Ken Rogoff. Michael Grunwald is the senior national correspondent with "TIME" magazine. He's also the author of "The New New Deal: The Hidden Story of Change in the Obama Era."

Ken Rogoff is a professor at Harvard University and a former chief economist at the International Monetary Fund.

Gentlemen, welcome. Michael, I want to start with you. When I tell my viewers, my viewers start -- when I tell them about investing, I say pick a goal. You say we should think about investing in infrastructure in the same way. What do you mean?

MICHAEL GRUNWALD, SENIOR NATIONAL CORRESPONDENT, TIME: Well, I think that's right. Look, I mean, as you mentioned the Obama stimulus did pour about $150 billion into our infrastructure and its build America bonds actually was sort of a hidden stimulus inside the stimulus put in another $180 billion. And that's a start. You know, that's how you start to create the sort of strong infrastructure that makes people want to make our economy more competitive and make people want to invest in us. But you have to also ask what the goal is.

You know the goal isn't just to build more roads or sewers, you know, for instance, you want to get people places. You know, as opposed to just building roads. So sometimes that involves more infrastructure, sometimes it involves more telecommuting. Sometimes it involves smarter infrastructure that's going to tell people where to go so that they're not in as much --

VELSHI: But ultimately the goal is --

(CROSSTALK)

GRUNWALD: It's not always --

VELSHI: Is a good standard of living and it's the idea that businesses will invest and create jobs? Right? If you've got a good standard of living, it makes companies want to hire people. People want to live in these places and that's largely what it does.

GRUNWALD: Exactly. You want good mobility so that you can get to work, so you can get around. You -- you know, you want, you know, good drinking water so that you don't get sick. You want a good energy system so that the lights stay on. This is the basics that make our economy attractive to investors.

VELSHI: Ken, this is an old conversation. You've been having it for a long time. You've been on this show, having it with me for a long time, and I've spoke on to a lot of politicians about it. Generally speaking, I would say the overwhelming majority of people say, sure, you should have better infrastructure and sure there should be some government involved -- involvement in it.

There's a small proportion of people generally conservatives who say government has no role in this. But assuming that you are in the group that agrees that government does have a role in it, the conversation then switches to how you pay for it. What's the best way for us to look at how to pay for improving our infrastructure?

KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: Well, first, Ali, government has to have some role because even if the private sector is building a road or building a port, there's all kinds of regulations, environment approvals. So it's sort of nonsense to say the government can't play a role or shouldn't play a role. But clearly the U.S. has a very conservative attitude towards allowing private sector funding in.

We should have more partnerships. The president has proposed the idea of an infrastructure bank which would just provide seed money, catalyze private-public partnerships. You know, admittedly, these things can grow out of hand. But we're in no danger of that. I think that's really the road we need to go down at this point.

VELSHI: Right. When you have a D plus and you're trying to get to a B, you've got a lot more leeway than when you have, you know, A and you're trying to get to an A plus. But, Ken, let me ask --

ROGOFF: There's a lot of low-hanging -- a lot of low-hanging fruit.

VELSHI: There's a lot of low-hanging fruit. But let me ask you about that because we do associate spending on infrastructure on, you know, roads and things like that. But in fact, should we be looking at some of the stuff that Michael just talked about? We're not competitive on any of these fronts including broadband and electricity transmission and things like that. Those can be as valuable.

You know, part of our problem, Ken, is that everybody expects to turn their tap on and get water and expects to turn the switch on and get electricity. So we don't see the value in investing more in those kinds of things.

ROGOFF: Well, Michael made a very good point about smarter infrastructure. The world is changing and what you used to need to have an economy and what you needed now is changing. And certainly things like new broadband are an issue. And as our population explodes in urban areas, water is an issue.

The electric grid is a horror show, especially some of the software connecting the different grids. And it's actually quite vulnerable to terrorism. So there are many things we need to do, you know, at a national level that we will wake up some day and regret if we don't.

VELSHI: So we need to look at a lot of new things.

Ken and Michael, stay right there.

Coming up, Michael talked about moving people around. I'm going to take you 10 stories underground to one of the biggest public work projects in the history of civilization. The cost is in the billions and people won't ride this train until at least 2016. Is it worth it?

(COMMERCIAL BREAK)

VELSHI: All right. Investing in infrastructure is one of the best things we can do to boost the economy. Over the short term, infrastructure investment creates short-term jobs. Over the long- term, better roads, railways, ports, electrical grids, broadband. They invite businesses to operate more efficiently. They save them money, they create jobs.

If you're a regular viewer of this show you probably saw me go underground in New York City last summer to get a close-up look at one of the biggest public works projects in American history. I'm talking about Manhattan's Second Avenue subway line. Completing it will cost 22 -- between $22 billion and $24 billion. What is behind the mammoth tab? Here's what I found out when I traveled 10 stories underground.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): Backhoe excavators that can cost $700,000 a piece. Manlifts that sell for up to $500,000. See that hydraulic drill jumbo? They can go for 800,000 grand a pop. These are the machines of modern day civil engineering. New York City has them working full speed ahead on its new Second Avenue subway line.

(On camera): Subways are expensive. Just to give you a sense of perspective, way back when, the first subway in Manhattan was 21 miles and it cost $35 million. This one is about a mile and a half for about $4.5 billion. That's more than a billion dollars a stop.

(Voice-over): And that's just for phase one. We went digging 10 stories below Manhattan to find out what goes into the bottom line on a new subway line.

TOM PEYTON, DIRECT OF CONSTRUCTION, SECOND AVENUE SUBWAY: It's a bargain. Down here it's a bargain. $800,000 a pop.

VELSHI: The most massive piece of equipment used is the tunnel boring machine. The last time New York built a subway it used the cut and cover method. Digging from street level. Boring is much more efficient and it disrupts life aboveground a lot less.

PEYTON: The one that did this is 22-foot in diameter. A little over two stories tall. It can go on average about 50 foot a day.

VELSHI: One of these things costs $12 million and requires 20 people to operate it. At 50 feet a day, boring two mile-and-a-half tunnels takes a long time.

PEYTON: But this is a linear project.

VELSHI (on camera): Right.

PEYTON: You must do the tunnels before you do this.

VELSHI (voice-over): And highly specialized laborers are the ones doing that. Sand hogs or urban miners work alongside operating engineers who drive and maintain the machinery.

PEYTON: On average we pay a guy about $1,000 a day. And that's base salary plus benefits.

VELSHI: It's putting people to work in a tough economy. The Metropolitan Transit Authority expects phase one of the subway, that's three and a half stops and a new tunnel at a fourth stop, to create 130,000 jobs with an economic impact of almost $18 billion over the nine years of construction.

(On camera): New Yorkers keep asking why does it take so long.

PEYTON: It is normal.

VELSHI: It is what it takes.

PEYTON: It is normal. It is what it takes.

VELSHI (voice-over): All the while Americans are footing the bill no matter where they live.

PEYTON: Second Avenue right now, $1.3 billion comes from the federal government. And the rest of $3.15 comes from New York.

VELSHI: The portion from New York comes largely from New York state bonds and MTA bonds.

PEYTON: And in 2016 when we swipe our card and ride the first train, it's going to feel real good.

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VELSHI: So there you have it. New York and the Feds investing billions in infrastructure.

Let's bring Ken Rogoff back and Michael Grunwald into the conversation.

Ken, you say infrastructure projects that give a positive rate of return should be funded, particularly in these tough -- these low- interest times. How do you define huge projects and in an age of cheap money, what's the kind of return we should be looking for?

ROGOFF: Well, first, I'll have to say I was startled by that report. Those boring machines look like they are out of a jewel's burned novels. It's really --

VELSHI: It was pretty deep.

ROGOFF: Futuristic. It's kind of incredible. I'm sure my kids would like to go watch them in action. But you know, that is the tough question that's a very political question. Because there are lots of ways to cut the numbers to say one project better than another. And I think it's one of the reasons why you need some sort of technical, nonpolitical body, maybe a couple of them to kind of judge these things.

I like the idea of a national infrastructure bank which may be like the World Bank, which does countries, would have technical experts who wouldn't necessarily decide things, but at least give a point of view to say, you know, what are really the benefits, what are the likely costs. We need a way to do that because there are just thousands and thousands of different projects all competing for the same money.

VELSHI: And that's often the criticism, Michael, that these things, if you have an infrastructure bank it's becomes political, people will want things in their districts.

Let me ask you this. How do we determine -- I mean, they're going to be -- people are going to tweet me to say that is amazing. I love that we're doing this. I love that we're building that stuff and I'm going to get as many tweets from people who say, I've got nothing to do with New York. I'm never going to use the Second Avenue Subway. Why is $1.3 billion of federal money going into this?

So, Michael, how do we decide what we should be funding and what we shouldn't be?

GRUNWALD: Well, right. Well, part of this at the public level there needs to be a real evaluation of the public benefits. Right? Of getting millions of people to work, of keeping New York City the world's financial center. And of through other -- you know, that's maybe as you do the Long Island railroad to the Grand Central. And, you know, this is you don't have to invest billions of dollars into the LIE. These are all the kinds of decisions that get made at the -- at the public level.

As -- as the professor mentioned, when you get in private money as well, that helps, that helps provide some rigor to the -- to the conversation.

VELSHI: Right.

GRUNWALD: You look at the freight rail industry which invested $25 billion in its own -- in its infrastructure last year, which is, you know, all good for the country because they felt that it had a return for them. They're also doing some public/private work on projects that had public benefits. And again, those are -- you know, you see that in Chicago, you see that in the Washington, D.C. area where they competed for public money and won.

They are going to have -- that's going to help the country in terms of moving our stuff around more efficiently. It's going to help us in terms of, you know, the carbon emissions created by long-haul trucking, in terms of the congestion on the road.

When you bring in the private sector as well as the public -- you know, with the kind of meritocratic public approach, you can have some kind of -- you know, there's a synergy there.

VELSHI: Ken, you actually mentioned the Second Avenue Subway in an op-ed you wrote for the "Financial Times." I love what you said, you said there's a joke about Chinese tourist who asked their New York City tour guide how long the Second Avenue Subway will take to finish. And on being told two years, the Chinese translator hesitates and asks, wait a second, you mean two weeks, right?

(CROSSTALK)

ROGOFF: Well, you know, it does take us longer to do things. Of course it's a lot harder to put a subway under New York City than if you're building it in the middle of an empty space in China. And also we have to respect the rights of our citizens who live above it. We have all sorts of rules and regulations. But at the -- you know, at the same time, you want to find ways to speed some of these things up.

One of the recommendations from many different sources is to find ways to get approvals faster so that these projects don't take 15 years.

VELSHI: Right.

ROGOFF: But more like a couple of years.

VELSHI: Yes. And some of the folks who are in that construction, the businesses on Second Avenue are not thrilled with this. They'll do very well one day, but right now, it's costing them.

ROGOFF: They will.

VELSHI: Guys, good to see you. What a great conversation. Ken Rogoff is a professor at Harvard University and the former chief economist with the International Monetary Fund, and Michael Grunwald is a senior national correspondent of "TIME" and the author of "The New New Deal: The Hidden Story of Change in the Obama Era."

Well, the tiny island of Cyprus stole the headlines all week. And its economic future is uncertain. That's bad news for Cypriots who had their money trapped in the island's banks for more than a week. But should anyone else care?

A cross-continental debate with my good friend Richard Quest coming up next.

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VELSHI: It is my favorite time in the show, time for a little "Q&A", Quest and Ali, with my good friend, Richard Quest, he's the host of "QUEST MEANS BUSINESS" on CNN International. There he is.

Richard, the latest fiscal crisis to hit Europe is happening in that tiny Mediterranean island of Cyprus and even markets here in the U.S. reacted negatively when the European Central Bank proposed taxing bank deposits on the island by as much as 10 percent in exchange for a $15 billion bailout of the banking system. But the plan is in disarray, as you know, Richard, because the Cypriot parliament rejected the move to tax those bank deposits.

Banks on the island have been shut down, as you could see there, all week to prevent a run on deposits. Panicked Cypriots have been lining up at ATMs trying to access their cash. There are limits on that.

Now, listen, Cyprus is considered a tax haven for Russia and other global investors, and their banking system is eight times larger than that tiny little island's economy. But those banks made some pretty bad bets on Greek debt and now they need some relief.

The ECB has given Cyprus until next week to figure out acceptable terms in exchange for a bailout and the world's eyes are focused on this island, Richard, because of its potential global impact which is why today's question -- sorry for the long wind up -- is Cyprus even a big deal?

Richard, who should go first? Sure I will go first. OK --

RICHARD QUEST, HOST, CNN'S QUEST MEANS BUSINESS: Well, I think --

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VELSHI: Shall I go first? Give me 60 seconds on the clock.

Richard, Cyprus is a dot on the map, a tiny one. We're talking about $15 billion bailout which is huge for the little island but small compared to bailouts worked out with Spain and even Greece. It's not too big to fail. Cyprus is too small, doesn't matter, and the eurozone would survive if Cyprus were to exit.

Now taxing deposits, Richard, in exchange for bailout funds should make Europeans a little bit skittish because it could set a precedent for the future but Cyprus is interesting for its geopolitical implications, particularly because of Russia.

There are suggestions that Russia might demand rights to a naval base there, contracts to exploit gas, natural gas reserves under the island's territorial waters, 36 percent of Europe's gas supply comes from Russia already. That leverage over Europe would only increase if Russia gets involved in Cyprus' natural gas.

Cyprus is important for that reason because Europe doesn't want a whole lot more of Russia in Europe, but that's really the only effect. It's going to have minimal effect on the rest of the world, Richard. I don't think it matters all that much.

QUEST: Oh, dear. The short answer, Ali, is yes, even though Cyprus is just that dot on the map, a fraction of the eurozone economy, it is what it stands for politically, philosophically, monetarily. It's biggest and broadest, it shows the eurozone crisis is far from over. It only takes a smaller spark to rekindle the flames.

We've known Cyprus was a problem for months if not years, since Greek bond holders took a haircut. Only at the last minute did everything fall apart. It also shows the inability of Europe to deal with crises, the U.S. may have gone to the edge of the fiscal cliff and sequester come and gone, but no one went over the top.

In Europe time and again, all by good luck than good management, the whole thing comes crashing down. And at the very smallest level whoever thought it was a good idea to pilfer depositor's money with this tax goes against the very idea of deposit insurance and protecting the small saver, so whichever way you look at this, Ali Velshi, this is a bad idea, and yes, it matters.

VELSHI: Very interesting. You got my attention about halfway through that, Richard. Very nice. Good to see you as always. By the way, don't be jealous. But this does appear to be your bell. I think you left a version of it here in New York, Richard.

Always my pleasure to see you. There you go. Two good bells.

All right. Coming up, whether you think Cyprus matters, you couldn't ignore all the tweets about it this week, at least I couldn't. But lots of people were also tweeting about the milestone Twitter itself hit this week. I will tell you what that is next.

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VELSHI: Seven years ago this week a website with a weird but cute name flew onto the social media scene, it was called Twitter, a microblogging site where users were forced to keep their thoughts, hashtags and links, to 140 characters. Now the site has 500 million registered users. More than 300 million tweets go out each day.

Among some of the more memorable moments of Twitter, back in 2009 Ashton Kutcher beat this network's handle to become the first user with a million followers. He then paid a visit to our world headquarters in Atlanta, somehow got on the roof and draped his Twitter handle over the CNN logo.

In December 2012 then Pope Benedict became the first pontiff to tweet using the handle @pontifex. Pope Francis is already tweeting frequently after just a few days at the Vatican. And finally my personal favorite is my first tweet. Here it is, @Alivelshi, "Ali is trying out this Twitter thing, somewhat uncertain as to what to say." Since then I've become a pretty active tweeter, and my tweets have become I hope much more informative and entertaining than that first one.

I'd like to take this opportunity to thank all of you who follow me on Twitter. If you don't my handle is @Alivelshi. If you aren't on Twitter, just sign up and then follow me. It only takes a few minutes. The rewards are never ending. I do read nearly every tweet you send me and I respond to many of them. I give props to tweets I like and I'm not afraid to call you out if I disagree with you.

Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday 1:00 p.m. Eastern, Sunday at 3:00 p.m. and weekdays at 3:30 p.m.